Beginning on June 2, the entire Senate plans to debate global warming solutions for the first time in three years. The focus of the debate will be the Climate Security Act, S. 3036, sponsored by Sens. Barbara Boxer (D-CA), Joe Lieberman (I-CT), and John Warner (R-VA). The latest version of the bill, which is a substitute for the legislation passed late last year by the Senate Environment Committee, was unveiled on May 21.

This 157-page bill, which seeks to reduce greenhouse gas emissions from 2,100 facilities nationwide, is one of the most complex environmental programs every proposed. It would establish a “cap-and-trade” system for coal burning power plants, natural gas processors and importers, petroleum refiners and importers, and other producers of greenhouse gases. Each covered facility would be required to have a permit, or allowance, for every ton of carbon dioxide or other equivalent greenhouse gases emitted.

Allowances will be distributed for free in limited amounts to certain categories of emitters until 2030; the remaining allowances will be auctioned by the Environmental Protection Agency or given to various entities for public purposes. Facilities who have excess allowances may hold (or bank) them for future use, or sell them to other persons, including covered entities that need additional allowances to avoid reducing their emissions. Covered facilities can also meet up to 30 percent of their obligations by purchasing “compliance offsets,” which represent emission reductions achieved by entities not subject to the cap that have been certified by the EPA as meeting certain criteria to assure their integrity.

Some studies have already been conducted on the possible effects that this legislation will have on our economy, environment, and technology. These findings may be proven wrong because such studies can never adequately anticipate or measure innovations that will create cheaper solutions to problems once our engineers have binding emissions levels and deadlines. But assuming that the provisions are implemented to follow the letter and the spirit of the law, we could expect the following effects:

Sharply reducing emissions. Phase I would require emissions from covered sources to decrease by 18 percent below 2005 levels in 2020, and Phase II would lower them by 71 percent below 2005 levels in 2050. The former would reduce greenhouse gases by 900 million tons, while the latter would reduce emissions by 4.1 billon tons. This is equivalent to removing an estimated 126 million cars off the road by 2020, which equals half of the cars on the road today. The Phase II target is equivalent to removing 574 million cars off the road.

No negative effect on economic growth. The Climate Security Act would have almost no negative effect on long-term economic growth, according to a number of economic models. The Environmental Defense Fund analyzed the EPA’s evaluation of the Senate Environment Committee version of the bill, and concluded that, “under business as usual, the total output of the U.S. economy is projected to reach $26 trillion in January 2030. With a cap on greenhouse gases, the economy will get there by April.”

Almost no effect on household budgets. The Environmental Defense Fund predicts that, “For the average American family, the cost of capping greenhouse gases will amount to less than 1 percent of household budgets over the next two decades.”

Minimal increases in electricity bills. The Energy Information Administration predicts that once electricity prices include the cost of greenhouse gas reductions, the price of electricity from fossil fuels will increase. At the same time, higher electricity prices mean that electricity use will likely shrink, thereby offsetting some of the price increase with lower demand. The Environmental Defense Fund found that under the Senate Environment Committee-passed version of the Climate Security Act, the “EIA study forecasted an increase of $3.30 (about 3.5 percent) in the average household’s monthly electricity bill” compared to business as usual from 2012-2030. This is about 10 cents per day.

Limited increases in gasoline prices. The Environmental Defense Fund conducted an assessment of various government and independent studies of the earlier version of the Climate Security Act and found that the median increase in gasoline price hikes was 13 percent by the year 2030. This is an increase of slightly more than one half of 1 percent per year. To put that increase in perspective, gasoline prices rose 22 percent between January 7 and May 26, 2008.

Reduced dependence on foreign oil. The Natural Resources Defense Council commissioned the International Resources Group to conduct a study to predict ways in which emissions reductions under the Climate Security Act could occur. The study estimates that “Oil imports drop to about 35 percent of total oil supply in the 2030 and 2035 periods due to both the lower demand and the use of CCS [carbon capture and storage] for Enhanced Oil Recovery.”

Advancements in the use of renewable energy, efficiency, and new carbon technologies. The study also found under one scenario that 100 percent of reductions can be met with contributions from renewable energy (24 percent); electricity demand reduction, or efficiency (19 percent); international credits (18 percent); domestic offsets (13 percent); carbon capture and sequestration for coal-fired power plants (8 percent); and other sources.

Another scenario that invests more funds in the prompt development and deployment of carbon capture and sequestration found that CCS could contribute 19 percent of the reductions with a lesser contribution from efficiency and renewables.

Revenue to help families and spur innovation. Auctioning emissions allowances between 2012 and 2050 could generate total revenues of $6.7 trillion dollars (allowance revenue calculations based on various models’ predictions of auction price). Over that period, the bill would spend the money on various needs, including: $800 billion in tax cuts to offset higher energy prices for low-income households; $900 billion in rate relief to protect consumers from higher electricity prices; $955 billion for deficit reduction; $342 billion in international assistance to help developing countries adapt to the effects of global warming; $191 billion in worker training, particularly for clean energy industries; $300 billion to promote energy efficiency; $150 billion to invest in renewable energy; $171 billion for transit and reducing vehicle miles traveled; and $68 billion in incentives to auto manufacturers for building significantly more fuel efficient cars.

New jobs in the renewable energy sector. The $150 billion of renewable energy investment will spur job growth, as well as renewable energy production. If this sum were equally divided into $50 billion for investments in wind, concentrated solar, and geothermal, we estimate that it would generate a total of: 81 billion kilowatt hours of wind-powered electricity, which could power approximately 7.7 million homes and create 42,000 jobs; 52 billion kWh of concentrated solar electricity, which could power about 5 million homes and create 5,600 jobs; and 131 billion kWh of geothermal electricity, which could power about 12.4 million homes and create 71,000 jobs.

Investment in carbon capture and sequestration technology. Coal is one of the major producers of greenhouse gases. It also fuels half of U.S. electricity generation. It is difficult to imagine a scenario where coal does not continue to play some role during the transition to low-carbon fuels. “Carbon capture and sequestration” technology would enable some coal-fired power plants to capture and store underground 85 percent of their greenhouse gas pollution.

The Climate Security Act would provide $15 billion for five-to-10 pilot projects to further develop and fine tune this technology during the early years. After the demonstration of this technology, the bill includes incentives to build up to 80-100 gigawatts (approximately 160-200 500 megawatt plants) of coal-fired power plants that capture and store greenhouse gases. There should still be a performance standard that requires all new coal plants to use CCS.

The Climate Security Act introduced last week by Sens. Boxer, Lieberman, and Warner is by no means perfect. The early emissions reduction target in the bill may not be met due to generous offset and cost containment provisions, the latter of which would make it very tempting to avoid significant amounts of emission reductions in the early years by flooding the marketplace with additional allowances that polluting facilities could buy in lieu of making reductions. In addition, the bill should require that all new coal-fired power plants meet a new source emissions performance standard equal to the 85 percent reduction of greenhouse gases achievable via carbon capture and sequestration.

Nonetheless, the Climate Security Act is the most comprehensive and potentially effective global warming bill ever before the U.S. Senate. Senate Environment and Public Works Committee Chair Barbara Boxer undertook a herculean effort to conceive and draft the latest version that the Senate plans to debate next week. Sens. Joe Lieberman and John Warner deserve credit for their significant contributions to this and previous versions of the bill. It represents the best opportunity for the Senate to make progress on national global warming pollution reductions in 2008. The bill provides an essential first step on the path toward achieving the pollution reductions necessary to prevent the worst effects of global warming.